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have been $3,962,764 to reflect $6,236 in selling costs
documented in the record. If we adopt petitioners' approach, the
1989 income tax deficiency would be $1,030,663. The reduction of
the income tax deficiency also causes a reduction in the section
6663 penalty from $774,307 to $772,997. Support for petitioners'
entitlement to a $6,236 reduction is adequately documented in the
record and is an integral part of our finding that the
transactions in question do not qualify under section 1031.
After considering the parties' proposed computations, our
opinion, and the record in these consolidated cases, we hold that
petitioners' approach to the computation for the 1989 deficiency
and penalty is correct.
In addition, petitioners objected that the $392,873.13
overpayment for 1989 after considering post-notice payments was
understated in that petitioners' early December 1997 payment in
the amount of $1,323,723 was not considered in respondent's
computation. Following a telephone conference between the Court
and the parties, respondent's counsel determined that the
$1,323,723 payment had been made by petitioners after
respondent's computation had been submitted to the Court and that
the overpayment after considering post-notice payments should be
increased accordingly.
With respect to the 1990 taxable year, the Court did not
request a computation under Rule 155. Respondent had determined
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